Iraq's finance minister on Tuesday dismissed a threat by the country's autonomous Kurdish region to cut off oil exports if the central government continued to withhold promised funds.
Rafa al-Essawi's remarks were the latest in a long-running dispute over energy contracts and revenues between Baghdad and Kurdistan, with the two sides squabbling over payments, revenue-sharing and the central government's refusal to recognise deals Kurdish officials have signed with foreign energy firms.
The latest round in the Kurdistan-Baghdad dispute comes with Iraq in the spotlight as it hosts an Arab summit for the first time in more than 20 years.
"We are not afraid of exports from the Kurdistan region being stopped," Essawi told AFP on the sidelines of a meeting of Arab economy, finance and trade ministers in Baghdad ahead of Thursday's summit of regional leaders.
Essawi said Iraq was readying to pay 650 billion Iraqi dinars ($546 million) to foreign companies operating in the northern three-province region once it received the appropriate paperwork from official auditors.
Kurdish authorities said on Monday they had reduced oil exports to 50,000 barrels per day (bpd), and threatened to cut them off entirely if the central government did not transfer nearly $1.5 billion it claimed it was owed.
Kurdistan said in May 2011 that Iraq had paid oil contractors in the autonomous region as part of an "interim agreement on revenue allocation."
The region has signed around 40 contracts with international companies on a production-sharing basis without seeking the express approval of the central government's oil ministry, which regards Kurdistan's deals as illegal.
The federal oil ministry, meanwhile, has awarded energy contracts to international companies on the basis of a per-barrel service fee. It has also refused to sign deals with any firm that has agreed to a contract with Kurdistan.
Baghdad has yet to approve an oil and gas law that would regulate the sector, with proposals languishing for several years.